EX-10.1
2
g07337exv10w1.htm
EX-10.1
Exhibit 10.1
Execution Copy
dated January 29, 2007
between
FIRST DATA MERCHANT SERVICES CORPORATION,
XXXXX FARGO BANK, N.A.
and
iPAYMENT, INC.
This (this “Agreement”) dated as of January
29, 2007 (the “Effective
Date”) is by and between iPayment, Inc. (“ISO”), First Data Merchant Services Corporation (“FDMS”),
and Xxxxx Fargo Bank, N.A. (“Bank”). Under this Agreement, FDMS and Bank will collectively be
referred to as “SERVICERS.”
RECITALS
| A. | | Bank is a Member of Visa and MasterCard, and, as such, is authorized to sign agreements
enabling Merchants to accept Visa and MasterCard Bank Cards from their customers in accordance
with the terms and conditions of their respective Rules and regulations. |
| |
| B. | | ISO is a registered “independent sales organization” with Visa and a registered “member
service provider” with MasterCard and is in the business of developing and marketing Merchant
Bank Card programs, originating Merchant relationships, and providing Merchant Bank Card
management services. |
| |
| C. | | In conjunction with the processing services rendered to ISO by FDMS pursuant to the Service
Agreement dated as of July 1, 2002 by and between ISO and FDMS, as amended (the “Service
Agreement”), ISO and SERVICERS desire to establish the sponsorship of a Merchant processing
Program on the terms and conditions set forth in this Agreement. |
| |
| D. | | ISO, as assignee of Transaction Solutions, LLC, and Concord Transaction Services, LLC,
successor in interest to EFS National Bank and an Affiliate of FDMS, are parties to that
certain ISO Services and Marketing Agreement dated as of April 17, 2002, as amended (the “TS
ISO Agreement”). The parties now desire to terminate the TS ISO Agreement and to incorporate
the services provided thereunder into this Agreement and the Service Agreement. |
| |
| E. | | ISO, as assignee of Petroleum Card Services, Inc., and CTS Holdings, LLC successor in
interest to Concord Payment Systems, Inc. and National Payment Systems, Inc. and an Affiliate
of FDMS, are parties to that certain Processing Service Agreement dated as of April 16, 2001,
as amended (the “PCS ISO Agreement”). The parties now desire to terminate the PCS ISO
Agreement and to incorporate the services provided thereunder into this Agreement and the
Service Agreement. |
| |
| F. | | Bank is the acquiring bank for the transactions processed under the TS ISO Agreement and the
PCS ISO Agreement. |
AGREEMENT
In consideration of the foregoing and the covenants and conditions contained herein, the
parties agree as follows:
Page 1
SECTION 1
DEFINITIONS
As used in this Agreement (including the recitals set forth above), the following terms shall
have the meanings set forth below (each of which includes the singular and the plural):
“ACH” shall mean the electronic transfer of funds through an automated clearing house
system.
“Affiliate” shall mean any entity that directly or indirectly controls, is controlled by or
is under common control with a party.
“Applicant” shall mean a Merchant who submits an Application.
“Application” shall mean the Merchant application used by ISO, as provided by and/or
approved by SERVICERS and ISO, and other existing Merchant applications assigned to Bank as
part of the initial BIN/ICA transfer.
“Application Materials” shall mean the Application and all other materials developed to
facilitate the execution of Merchant Processing Agreements, as approved by SERVICERS and
ISO. ISO shall cease its use of any Application Materials that become unacceptable to
SERVICERS within ninety (90) days of receipt of written notice from SERVICERS or such
shorter period of time as may be required to comply with the Rules or to prevent a loss to
SERVICERS.
“Approved Merchant” means any Merchant that:
| | (a) | | Is solicited by ISO (or ISO’s Other MSP’s or IC’s) for
participation in the Program; |
| |
| | (b) | | Meets the established criteria for participation in the
Program, including the Merchant Processing Policy; and |
| |
| | (c) | | Enters into a Merchant Processing Agreement. |
Approved Merchants may also include Merchants converted to the Program as part of the
initial BIN/ICA transfer and/or subsequently acquired Merchants that meet the established
criteria for participation in the Program, including the Merchant Processing Policy, and
whose sponsorship is assigned to Bank.
“Bank Card” shall mean a credit card or debit card issued by a member of MasterCard, Visa or
any other association or card issuing organization (including Debit Networks) and bearing
its respective trade names, trademarks, and/or trade symbols.
“Business Day” shall mean any day on which Bank is open for business, other than Saturdays,
Sundays, or state or federal holidays.
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“Change of Control” means a change in the power to direct the management or affairs of ISO or
the beneficial ownership of more than 51% of the equity securities; provided, however,
that becoming a public company with the same management team or changing the beneficial
ownership of more than 51% of the equity securities while maintaining the same
management team will not constitute a change in control.
“Confidential Information” shall mean non-public information about, and proprietary
materials of, any party as defined and more fully described in Section 9.1.
“Deconversion” shall mean the activities performed by SERVICERS at the request of ISO to
effect a Program Transfer, which activities and associated fees/costs will be set forth in a
written plan developed before any such activities are begun and in good faith by ISO and
SERVICERS that is designed to complete the Program Transfer within 6 months, at SERVICERS’
then-current fees/costs. If ISO requests no services from SERVICERS in connection with the
deconversion, then there will be no fees/costs to ISO other than any pass-through Bank Card
association fees, if any.
“Effective Date” is defined in the first paragraph of this Agreement.
“Eligible Merchant” shall mean a Merchant that meets the Merchant Processing Policy and is
solicited for the Program by ISO or ISO’s Other MSP’s or IC’s.
“FFB” means FDMS’s Affiliate, First Financial FFB, an industrial bank formed under the laws
of the State of Colorado.
“IC” shall have the meaning provided in Section 2.4.
“Including” whether capitalized or not, means “including but not limited to.”
“Intellectual Property” shall mean copyrights, Marks, trade secrets, patents or other
proprietary rights of a party.
“ISO” includes ISO’s wholly-owned subsidiaries that are either independently registered with
Visa and MasterCard or solicit Merchants under the ISO’s registration, and also includes,
when the context so requires, ISO’s Other MSP’s and IC’s.
“Losses” shall mean any losses, damages, liabilities, judgments, orders of restitution, and
penalties (including civil monetary penalties and Visa and MasterCard fines and penalties).
“Marks” shall mean the trademarks or service marks of a party.
“MasterCard” shall mean MasterCard International, Incorporated.
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“Material” when used with reference to information, a fact or circumstance, a course of
action, a decision-making process or other matter, shall be limited to information, facts
and circumstances, courses of action, decision-making processes or other matters as to which
there is a substantial likelihood that a reasonable person would attach importance.
“Member” shall mean an acquiring member of Visa and MasterCard.
“Merchant” shall mean an individual or entity that engages in, or desires to engage in, Bank
Card transactions with its customers.
“Merchant Account” shall mean the account relationship established between ISO, Bank and an
Approved Merchant pursuant to a Merchant Processing Agreement.
“Merchant Discount Amount” shall mean the portion of the face amount of Bank Card
transactions submitted by Approved Merchants and processed through the Program that is paid
to SERVICERS. Further, this portion shall be determined by application of the Merchant
Discount Rate that is reflected in each Merchant Processing Agreement.
“Merchant Discount Rate” shall mean a percentage rate to be applied to determine the portion
of the face amount of a Bank Card transaction that will be charged to the originating
Merchant, which rate shall be reflected in each Merchant Processing Agreement and subject to
change from time to time pursuant to the terms of the Merchant Processing Agreement.
“Merchant Portfolio” shall mean the group of Approved Merchants participating in the Program
pursuant to this Agreement.
“Merchant Processing Policy” shall mean the merchant policy, guidelines and standards
established by SERVICERS under which SERVICERS will enter into a Merchant Processing
Agreement with a Merchant as it may be modified by SERVICERS in their discretion from time
to time during the term of this Agreement. Attached as Exhibit B is a list of certain
categories of Merchants who are always unacceptable under the Merchant Processing Policy,
along with a summary of other policy guidelines and standards.
“Merchant Processing Agreement” shall mean a written agreement among ISO, Bank and an
Approved Merchant that governs the Approved Merchant’s participation in the Program, as
provided by and/or approved by SERVICERS and ISO. ISO shall cease its use of any form of
Merchant Processing Agreement that becomes unacceptable to SERVICERS within ninety (90) days
of receipt of written notice from SERVICERS or such shorter period of time as may be
required to comply with the Rules or to prevent a loss to SERVICERS. For the avoidance of
doubt, ISO shall be responsible for effecting any necessary and appropriate amendments to
the Merchant Processing Agreement that may become necessary as a result of subsequent
amendments to the Rules or SERVICERS’ requirements. In the event a Merchant refuses to
consent to any such
amendment during the applicable ninety (90) day period, ISO will notify SERVICERS,
Page 4
and Bank
or FFB will have the right to terminate its sponsorship of such Merchant and the applicable
Merchant Processing Agreement.
“Merchant Reserve Account” shall mean one or more accounts maintained by SERVICERS as
security against Merchant liabilities to ISO or SERVICERS.
“Minimum Balance” shall have the meaning provided in Section 6.1(a).
“Net Program Participation Fees” shall mean, at any point in time, all Program Participation
Fees minus the sum of:
| | (a) | | All compensation and other amounts (including unreimbursed
chargebacks and payments to the Reserve Account) due SERVICERS; |
| |
| | (b) | | [***] |
| |
| | (c) | | Pass-Through Costs and Interchange. |
“Offset Account” shall mean an account at Bank that is established and maintained by FDMS to
allow SERVICERS to credit and debit funds as provided in Section 6.
“Other MSP” shall have the meaning provided in Section 2.4.
“Pass-Through Costs and Interchange” shall mean the amounts charged by MasterCard, Visa, and
other networks or Bank Card associations (including interchange fees, dues and assessments)
in connection with the Approved Merchant transactions, the liability for which shall be the
sole responsibility of ISO except as otherwise described herein.
“Payment Date” means: (i) for Merchant Accounts originally covered by the TS ISO Agreement
and the PCS ISO Agreement, the [***] day (or first Business Day thereafter if such day
is not a Business Day) of each calendar month during the term of this Agreement; and (ii)
for all other Merchant Accounts on the FDMS “Omaha” platform covered by this Agreement, the
first Business Day after the day the funds are available and in Bank’s settlement account,
but in no event later than [***] [***] days after the end of each month.
“Processing Year 1” means the period commencing on the Effective Date and ending on June
30, 2007.
*** Omitted pursuant to a confidential treatment request.
The confidential portion has been filed separately with the SEC.
Page 5
“Processing Year” means each twelve (12) calendar month period commencing on the first day
of July and ending on the last day of the following June, except for Processing Year 1 which
is specifically defined.
“Program” shall mean ISO’s sales and marketing activities on behalf of itself and SERVICERS,
the processing of Merchant Applications, and the provision of Bank Card transaction
processing services to Approved Merchants under the terms of their Merchant Processing
Agreements.
“Program Participation Fees” shall mean all fees owed by Merchants to Bank and ISO under the
applicable Merchant Processing Agreements, including the Merchant Discount Amounts or
transaction fees, which amounts shall be recommended by ISO, but in all cases will be
subject to final approval by Bank, which approval shall not be unreasonably withheld or
delayed.
“Program Standards” means the policies and procedures established by SERVICERS to be used by
ISO in connection with the solicitation of prospective Merchants and other policies,
procedures, fines and penalties established by SERVICERS that are designed to promote the
financial safety or soundness of the Program. The Program Standards may be modified by
SERVICERS from time to time in their sole discretion; provided, however, that SERVICERS will
discuss in good faith any concerns that ISO may have that any such change will adversely
affect ISO’s ability to add Approved Merchants to the Program. The current form of the
Program Standards are attached hereto as Exhibit D.
“Program Transfer” shall mean Bank’s transfer and assignment of the Merchant Portfolio and
the dedicated BINs/ICAs, including Bank’s interest in all Merchant Processing Agreements, to
a third party designated by ISO in accordance with Section 10.4.
“Promotional Materials” shall mean all written solicitations and advertisements and other
communications (including telemarketing scripts) used to market, promote, and solicit the
establishment of Merchant Processing Agreements with Merchants.
“PS ISO Agreement” is defined in Recital E of this Agreement.
“Reserve Account” shall mean the account at Bank that is to be established by ISO and fully
controlled by SERVICERS as described in Section 8.1 to insure payment of chargebacks, fees
and other amounts due to SERVICERS.
“Residual Account” shall mean an account established and maintained by (and in the name of)
ISO to allow Bank to credit funds as provided in Section 6.
“Rules” shall mean the by-laws, regulations and/or requirements that are promulgated by
Visa, MasterCard, Debit Networks and/or other Bank Card associations.
Page 6
“Service Agreement” is defined in Recital C of this Agreement.
“Termination Reserve Account” shall mean a reserve account to be established upon notice of
termination of this Agreement to insure the payment of chargebacks and credit/fraud losses
related to transactions with an acquirer’s processing date on or before the effective date
of termination of this Agreement, fees and other amounts which may become due to SERVICERS
following termination of this Agreement.
“TS ISO Agreement” is defined in Recital D of this Agreement.
“Visa” shall mean VISA USA Incorporated.
SECTION 2
PROGRAM SERVICES
| 2.1 | | SERVICERS’ Services/Pricing. |
| | (a) | | SERVICERS shall provide the services specified in this Agreement and the
exhibits and shall be compensated therefor as set forth in the Service Agreement and in
Exhibit A hereto. Any and all processing and related services rendered by SERVICERS to
an Approved Merchant in the Merchant Portfolio covered by this Agreement (including
without limitation Merchants initially processed under the TS ISO Agreement and the PCS
ISO Agreement) will be rendered pursuant to and billed at the rates set forth in the
Service Agreement. Any and all sponsorship, clearing and related services rendered by
SERVICERS in connection with an Approved Merchant in the Merchant Portfolio covered by
this Agreement (including without limitation Merchants initially processed under the TS
ISO Agreement and the PCS ISO Agreement) will be rendered pursuant to and billed at the
rates set forth in this Agreement. Any Approved Merchant added to the Merchant
Portfolio and Program covered by this Agreement will be subject to all terms and
conditions of this Agreement. |
| |
| | (b) | | Any service described in this Agreement is subject to periodic revision by
SERVICERS to reflect changes (i) to the SERVICERS’ systems or the services provided by
SERVICERS and offered generally to SERVICERS’ customers and (ii) in the specific
services provided to ISO; provided, however, that SERVICERS will not implement any
changes or improvements to the services if such action will materially degrade the
quality of the services being provided to ISO by SERVICERS hereunder unless such change
is required by the VISA or MasterCard rules and regulations. |
| |
| | (c) | | SERVICERS may from time to time pass through to ISO actual increases in the
Pass-Through Costs and Interchange, to reflect any increases in such fees, costs and
charges to SERVICERS, upon thirty (30) days prior written notice to ISO (or,
if SERVICERS receive less than thirty (30) days notice of such increase, as much
prior notice as is practicable under the circumstances). |
Page 7
| | (d) | | In the event of any fee increases to ISO, SERVICERS shall provide reasonable
assistance to ISO in passing such fee increases through to Merchants under the Merchant
Processing Agreements. |
| |
| | (e) | | From time to time and in their sole discretion, SERVICERS may also perform
certain risk management services, such as periodic credit reviews, fraud reviews and
monitoring and collections, with respect to Applicants and Approved Merchants;
provided, however, that SERVICERS will not contact such Applicants or Approved
Merchants directly and will request any reasonably necessary information or
documentation from ISO. SERVICERS’ participation in any such activity shall not in any
way relieve ISO from its responsibility for credit and fraud losses which may result
from or be related to the Program. |
| |
| | (f) | | SERVICERS will provide ISO with a point of contact to address issues that arise
in connection with this Agreement, which will be one or more employees of FDMS. |
| | (a) | | ISO shall perform all sales and marketing activities in furtherance of the
Program, subject to the terms of this Agreement. It is understood that (at all times)
SERVICERS have the ultimate approval right for ISO’s solicitation procedures,
Application Materials, Application processing procedures, Merchant qualification
criteria, transaction processing procedures, Merchant Processing Agreements, Program
terms, Program Participation Fees, and other Program policies, all of which must be
approved in advance by SERVICERS in writing. |
| |
| | (b) | | ISO shall also perform all initial Merchant credit review and underwriting on
Applicants in a manner consistent with Section 4 of this Agreement, including the
Merchant Processing Policy. ISO shall at all times comply with the Program Standards. |
| |
| | (c) | | ISO will use reasonable efforts to convert the sponsorship and clearing of all
Merchants processing on the FDMS system under the Service Agreement to the sponsorship
and clearing of Bank under the terms and conditions of this Agreement; provided,
however, that ISO will not be required to attempt to convert any such Merchants if the
Merchant refuses to be sponsored by Bank, if the applicable Other MSP or IC refuses to
board accounts on the FDMS System or be sponsored by Bank, or if the conversion of such
merchants would not make economic or strategic business sense to ISO. |
| |
| | (d) | | For the avoidance of doubt, the parties acknowledge that ISO may utilize
SERVICERS’ services under this Agreement on a non-exclusive basis and there are no
minimum fees or utilization commitments under this Agreement. |
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| 2.3 | | BIN and ICA Assignment. SERVICERS will utilize BINs (Bank Identification Number) and
ICAs (Interbank Card Association) dedicated solely to ISO to facilitate the Program, and no
merchants other than Program Merchants will be under the dedicated BIN/ICA. The initial
BINs/ICAs to be transferred to Bank from ISO’s current sponsoring Member as part of the
Program launch are listed on Exhibit E. ISO shall be responsible, and shall reimburse
SERVICERS, for all actual, documented fees and costs imposed by third parties associated with
obtaining, installing and maintaining the BIN/ICA on the FDMS system, including any Visa and
MasterCard fees and assessments. Upon a Program Transfer in accordance with Section 10.4,
Bank will transfer the dedicated BINs/ICAs used in connection with the Program to a Visa and
MasterCard Member designated by ISO. |
| 2.4 | | Use of Other Independent Sales Organizations/Independent Contractors. |
| | (a) | | Except as expressly set forth herein, ISO shall not subcontract, assign,
license or in any other manner extend or transfer to any third party any right or
obligation ISO has with respect to SERVICERS’ Program. If ISO desires to use the
services of any other independent sales organization/member service provider (“Other
MSP”), such Other MSP must be (i) reviewed and approved by SERVICERS, in their sole
discretion, (ii) contracted with SERVICERS or Bank upon mutually agreeable terms, and
(iii) registered with Visa and MasterCard by Bank in accordance with the Rules. If ISO
desires to use the services of an individual independent contractor who represents
himself or herself as working for ISO using ISO’s legal/business name (“IC”), then ISO
shall enter into a written agreement with each such IC that (i) requires the IC to
comply with all applicable terms of this Agreement and all applicable Rules, laws and
regulations, and (ii) prohibits the making of any representation or creating any
liability on behalf of SERVICERS. |
| |
| | (b) | | ISO’s currently utilizes the Other MSP’s and IC’s listed on Exhibit E attached
hereto in its Merchant processing business. The parties agree to work together
expeditiously and in good faith to transfer the registration or re-register all such
entities with the appropriate Bank Card associations as required under the Rules. All
Other MSP’s must be appropriately registered before boarding accounts under Bank’s
sponsorship. |
| 2.5 | | SERVICERS’ Obligations. |
| | (a) | | Bank will sponsor ISO, at ISO’s expense, as an ISO for Visa, as an MSP for
MasterCard and, to the extent applicable, as similarly required for all other Bank Card
associations and, to the extent required by any Bank Card association, Bank also agrees
to sponsor for registration with Visa and/or MasterCard those Other MSP’s, IC’s,
subsidiaries and marketing representatives of ISO which are
approved by SERVICERS. Unless otherwise disallowed by a Bank Card association, Bank
agrees to maintain such sponsorships throughout the term of this Agreement and until
the first of either to occur: (i) [***] days after the |
*** Omitted pursuant to a confidential treatment request.
The confidential portion has been filed separately with the SEC.
Page 9
| | | | expiration or earlier
termination of this Agreement, or (ii) the effective date of the assignment of all
of the Merchant Processing Agreements or all of the BINs/ICAs and other items
specified and contemplated in Section 10.4. |
| |
| | (b) | | From time to time, and within a reasonable time from Bank’s receipt of notice
of an amendment to the Rules that is not otherwise available to ISO, Bank will advise
ISO, who shall, in turn, notify each Merchant, of any change in the Merchant Program
imposed by the Rules. |
| |
| | (c) | | At ISO’s request, Bank will obtain copies for ISO of any Bank Card association
manuals and publications (including Rules) that are available to acquiring members and
that are not otherwise available to ISO and that are allowed to be shared with ISO
under the Rules. Bank will forward to ISO all information routinely provided by each
Bank Card association that is not otherwise available to ISO that are allowed to be
shared with ISO under the Rules that would be helpful to ISO in fulfilling its
obligations under this Agreement. |
| |
| | (d) | | Bank will maintain all cardholder information under its control and/or
possession in a safe and secure manner in compliance with the Rules, and will report to
Bank Card associations as required by the Rules relating to internal policies and
procedures related to cardholder information security. Furthermore, Bank agrees to
inform the ISO immediately regarding any breach of information security that may have
an adverse effect to the ISO or to its Merchants. |
| |
| | (e) | | Bank, as the acquiring principal member, agrees to represent ISO’s interest in
disputes that might arise from time to time with a Bank Card association over
compliance with Rules and fines; provided, however, that ISO shall pay any fines or
other charges imposed on Bank by a Bank Card association relating to the Merchant
Program and any and all costs reasonably incurred by Bank in disputing the same,
including reasonable associated legal fees. |
| |
| | (f) | | FDMS has entered into an agreement with FFB, pursuant to which FFB will sponsor
(or assume the sponsorship of) Merchants, FDMS and its customers, including ISO, into
certain networks (“Debit Sponsorship”). ISO agrees to the additional terms and
conditions relating specifically to the Debit Sponsorship, as set forth in Exhibit G. |
SECTION 3
MARKETING AND COMPLIANCE
| 3.1 | | Application Materials. ISO shall use reasonable efforts to ensure that each
Application completed by an Applicant is current and contains accurate and complete
information.
ISO’s Application Materials shall comply with all applicable Rules, laws and regulations.
All Application Materials and any changes to the form and content thereof must be approved
in writing by SERVICERS prior to use by ISO, which approval will not be unreasonably
withheld or delayed beyond [***] [***] days unless such changes |
*** Omitted pursuant to a confidential treatment request.
The confidential portion has been filed separately with the SEC.
Page 10
| | | are voluminous. The
initial approved Application Materials are attached hereto as Exhibit C. |
| |
| 3.2 | | Compliance Responsibility. ISO shall be responsible for ensuring that the
Application Materials, the marketing plans, the Promotional Materials and all services
performed by ISO hereunder comply, and remain in compliance with, all applicable Rules, laws
and regulations; provided, however, that SERVICERS will in good faith inform ISO of issues or
concerns with ISO’s materials or practices observed by SERVICERS that SERVICERS reasonably
believe may be in violation of applicable Rules. All documents and any changes to the form and
content thereof must be approved in writing by SERVICERS prior to use by ISO, which approval
will not be unreasonably withheld or delayed beyond fifteen (15) days. |
| |
| 3.3 | | Promotional Materials. ISO shall be responsible, at its sole expense, for the
development of all Promotional Materials and shall bear the cost of the development and the
printing and distribution of the Promotional Materials. The Promotional Materials shall
comply with all applicable Rules, laws and regulations. All Promotional Materials and any
changes to the form and content thereof must be approved in writing by SERVICERS prior to use
by ISO, which approval will not be unreasonably withheld or delayed beyond fifteen (15) days.
ISO and ISO’s Other MSP’s and IC’s will not use SERVICERS’ or SERVICERS’ Affiliates’ Marks in
any advertising, promotional or display materials without SERVICERS’ prior written approval,
which approval will not be unreasonably withheld or delayed beyond fifteen (15) days. |
SECTION 4
APPLICATION AND UNDERWRITING PROCEDURES
| 4.1 | | Applications. ISO shall solicit Applications from Eligible Merchants at ISO’s sole
expense and shall provide each Applicant with Application Materials. ISO shall collect
completed and signed Application Materials and Merchant Processing Agreements from Applicants
and shall forward them to SERVICERS within [***] [***] Business Days after the merchant is
boarded (which may be accessed by SERVICERS online or forwarded to SERVICERS via ISO’s
automated application system or to a facsimile number designated by SERVICERS, provided such
complies with the Rules and applicable laws, rules and regulations) or to any other place(s)
as SERVICERS may designate for processing and document storage. ISO shall retain copies of
all Application Materials, Merchant Processing Agreements and documents forwarded to
SERVICERS. ISO shall provide SERVICERS with access to ISO’s automated application system and
ISO’s online Merchant Account system (BAMS, or any such successor or replacement system) at no
cost to SERVICERS. |
| |
| 4.2 | | Underwriting. ISO shall underwrite, perform a credit review and conduct a site
inspection, when applicable, for each Application as required by this Agreement, the Merchant
Processing Policy and the Rules to determine whether each Applicant is an Eligible Merchant.
ISO may conduct such credit review without notification to and participation by SERVICERS,
except as otherwise provided below (i.e., for any |
*** Omitted pursuant to a confidential treatment request.
The confidential portion has been filed separately with the SEC.
Page 11
| | | prospective Merchant that falls within the
risk and volume parameters set forth in this Section 4.2), provided that ISO performs the
credit review in accordance with the Merchant Processing Policy, the terms of this Agreement
and the Rules. In accordance with and as permitted by this Agreement, a third-party service
provider approved by SERVICERS may perform site inspections for ISO. In order to assist ISO in
its underwriting hereunder, SERVICERS shall assist ISO with checking Merchants and prospective
Merchants against the Terminated Merchant File/MATCH List or any similar list maintained by
any entity. ISO shall be responsible for all credit and fraud losses associated with the
Merchant Portfolio or the Program, regardless of any services or assistance that may be
provided by SERVICERS. For any high risk Merchant who in good faith ISO anticipates will have
annual Visa and MasterCard transaction volume equal to or greater than $[***] and any
low risk Merchant who in good faith ISO anticipates will have annual Visa and MasterCard
transaction volume equal to or greater than $[***], ISO shall advise SERVICERS and
permit SERVICERS to conduct their own credit review prior to boarding the account. Upon
receipt of a complete underwriting package from ISO, SERVICERS will respond to ISO within
[***] [***] Business Days as to SERVICERS’ acceptance or rejection of such Merchant. SERVICERS’
participation in any credit review will not in any way relieve ISO from its responsibility for
credit and fraud losses which may result from a Merchant’s transaction processing. SERVICERS
may at any time require that a Merchant relationship be terminated by ISO and Bank may cease
the provision of services to any such Merchant pursuant to the terms of the Merchant
Processing Agreement. SERVICERS shall have the right and authority to accept or reject any
Application. ISO shall obtain prospective Merchants’ authorization for ISO and/or SERVICERS to
obtain all reports (including personal and business credit reports) and other information
necessary in connection with the Application. ISO shall have the right, subject to and
pursuant to the terms and conditions of the Merchant Processing Policy, to cause any Eligible
Merchant with transaction card volume processing limits up to but not more than $[***]
per month, that has been approved by ISO, to be activated immediately in SERVICES’ systems.
SERVICERS agree to provide ISO with a final approval decision (i.e., acceptance, rejection or
required modification of the submitted Application) on submitted and complete Merchant
Applications for Eligible Merchants that are not classified as “high risk” on the High Risk
Merchant List attached hereto as Exhibit F and which seek approval for transaction card volume
processing limits in excess of $[***] per month but not more than $[***] per month,
within [***] [***] Business Days after SERVICERS’ receipt of such completed Merchant Application
and documentation. |
| |
| 4.3 | | Credit Decisions. ISO shall employ the Merchant Processing Policy guidelines
provided by SERVICERS in making credit evaluations. SERVICERS reserve the right, in their
sole and absolute discretion, to: |
| | (a) | | Change the Merchant Processing Policy; |
| |
| | (b) | | Reject the Application of any Applicant who SERVICERS determine does not
satisfy SERVICERS’ Merchant Processing Policy; and |
*** Omitted pursuant to a confidential treatment request.
The confidential portion has been filed separately with the SEC.
Page 12
| | (c) | | Terminate the Merchant Processing Agreement with respect to any Merchant at any
time, according to the Merchant Processing Agreement terms. |
Notwithstanding anything contained herein, so long as all of the following are true with
respect to a Merchant or Merchant Account, SERVICERS agree that, except as required by the
Rules, SERVICERS shall neither terminate nor make any change with respect to the discount or
reserve of said Merchant or Merchant Account that will have an adverse effect on the
Merchant or Merchant Account without the prior written consent of ISO:
| | (i) | | The Merchant or Merchant Account is not in a Bank Card association monitoring
program; |
| |
| | (ii) | | The Merchant or Merchant Account is not engaged in, or aiding and abetting, any
illegal activity or fraud; |
| |
| | (iii) | | The Merchant or Merchant Account is in compliance with the Merchant Processing
Policy; |
| |
| | (iv) | | The Merchant or Merchant Account is not processing transactions where products
are delivered or services rendered more than one (1) year (on the average, based upon
transactions of the immediately preceding three (3) months) following the date of the
transaction; |
| |
| | (v) | | No Bank Card association nor any regulatory agency has requested that the
Merchant or Merchant Account be terminated; |
| |
| | (vi) | | In its sole judgment, SERVICERS do not feel that they may be at financial risk
as a result of the activity of a Merchant or Merchant Account; and |
| |
| | (vii) | | The Merchant or Merchant Account is not causing reputational harm or risk to
either of SERVICERS in their reasonable judgment. |
In the event SERVICERS decide to terminate or make any such adverse change with respect to a
Merchant or Merchant Account, SERVICERS shall first attempt to give ISO notice of SERVICERS’
decision.
| 4.4 | | Merchant Reserve Accounts. ISO shall be responsible for determining the amount of
any Merchant Reserve Accounts. ISO shall also be responsible for ensuring all Merchant
Reserve Accounts are adequately funded. All Merchant Reserve Accounts, along with any
other monies or collateral collected from Approved Merchants, shall be deposited with Bank. [***] ISO will monitor daily Merchant account
activity and if in ISO’s reasonable judgment certain Approved Merchants and/or certain
transactions are possibly fraudulent or otherwise not in |
*** Omitted pursuant to a confidential treatment request.
The confidential portion has been filed separately with the SEC.
Page 13
| | | compliance with the Rules or in
violation of the Merchant Processing Agreement, ISO will instruct SERVICERS to change the
Merchant bank account information to cause funds otherwise due such Merchant to be diverted
and deposited into the Merchant Reserve Account for such Merchant. ISO will thereafter
promptly investigate each such suspicious incident and, upon request, promptly notify
SERVICERS of the result of any such investigation. If in any case ISO’s investigation
determines that no violation occurred, ISO will promptly request SERVICERS to release any
funds diverted to the Merchant Reserve Account to the Merchant’s deposit account. Once
monies or other collateral are deposited in a Merchant Reserve Account, SERVICERS shall
control the disbursements of such funds which are to be (a) paid to ISO or SERVICERS to
cover losses incurred in connection with the applicable Approved Merchant or (b) returned to
the applicable Approved Merchant upon a reduction in the potential risk to ISO and SERVICERS
arising from the provision of services to such Merchant within two (2) Business Days after
receipt of a written request by ISO. From time to time, ISO may request SERVICERS to
disburse monies held in a Merchant Reserve Account to ISO or an Approved Merchant as set
forth in the preceding sentence, and SERVICERS shall consider such requests in good faith.
Bank may draw against any Merchant Reserve Account to cover any Losses or credit and fraud
losses incurred by SERVICERS with respect to an Approved Merchant without the consent of ISO
or the applicable Approved Merchant. |
| |
| 4.5 | | Maintenance of Underwriting Staff. ISO shall at all times maintain an adequate and
qualified staff to perform underwriting and credit reviews of Program Merchants. |
SECTION 5
PROPRIETARY RIGHTS
| 5.1 | | General. To the extent required by the Rules, legal title to all Merchant
Applications, Merchant Processing Agreements and Merchant Accounts and records shall be in the
name of Bank, subject to its obligations to effect a Program Transfer pursuant to Section 10.4
of this Agreement; provided, however, that Bank acknowledges and agrees that ISO shall own and
maintain the Merchant relationship during the term of this Agreement and thereafter. ISO
acknowledges and agrees that all Merchant Applications, Merchant Processing Agreements and
Merchant Accounts and records may not be transferred, assigned, sold or exchanged by ISO
except as set forth in this Agreement or the applicable Merchant Processing Agreement. Bank
shall be exclusively responsible and entitled to receive all payments, collections, and other
amounts due from Merchants, subject to its payment obligations to ISO. Each of ISO’s and
Bank’s rights shall survive the termination
of this Agreement by either party and for whatever cause. For the avoidance of doubt, the
parties acknowledge and agree that ISO owns all Merchant Processing Agreements, Merchant
Accounts and Merchant relationships except as otherwise specifically set forth herein. |
SECTION 6
SETTLEMENT AND PAYMENT
Page 14
| | (a) | | FDMS shall establish and maintain the Offset Account at Bank during the term of
this Agreement to facilitate the making of all payments due to SERVICERS from ISO and
to ISO from SERVICERS. ISO agrees that the initial amount of the Offset Account will
be $[***] and, thereafter, the Offset Account will, at all times, maintain
collected funds in an amount at least equal to the amount then due SERVICERS hereunder
(which shall be referred to herein as the “Minimum Balance”). |
| |
| | (b) | | If the collected funds on deposit in the Offset Account at any point in time
are less than the Minimum Balance, SERVICERS may fund the Offset Account with any
monies or funds belonging or payable to ISO which are in SERVICERS’ possession.
SERVICERS will promptly notify ISO after making any such transfer. |
| |
| | (c) | | ISO hereby grants SERVICERS a security interest in the Offset Account to secure
all of ISO’s obligations to SERVICERS under this Agreement. |
| 6.2 | | Settlement Procedures. |
| | (a) | | SERVICERS shall settle each Merchant Account in accordance with the terms of
the applicable Merchant Processing Agreement, remitting to each Approved Merchant, by
ACH or other acceptable method, all settled funds due to the Approved Merchant after
first deducting from such settled funds all applicable Program Participation Fees and
any other amounts owed or withheld under the applicable Merchant Processing Agreement.
Merchant Account settlement is included in the fees set forth in Exhibit A and will not
incur an additional fee. |
| |
| | (b) | | On each Payment Date, SERVICERS shall credit ISO’s Residual Account in an
amount equal to all Net Program Participation Fees collected by SERVICERS since the
immediately preceding Payment Date and which have not otherwise been paid to ISO. |
| |
| | (c) | | In the event that the Net Program Participation Fees are insufficient to pay
any amounts due to SERVICERS’ under this Agreement (including compensation, funding the
Offset Account, funding the Reserve Account, or paying third party
processing fees), then ISO shall provide sufficient additional funds to SERVICERS
upon demand. |
| |
| | (d) | | [***] |
*** Omitted pursuant to a confidential treatment request.
The confidential portion has been filed separately with the SEC.
Page 15
| 6.3 | | Payment Deferrals. In addition to any rights now or hereafter granted under this
Agreement or applicable law and not by way of limitation of any such rights, SERVICERS are
hereby authorized by ISO, at any time and from time to time, without notice or demand to ISO
or to any other person (any such notice and demand being hereby expressly waived), to setoff,
recoup and to appropriate and to apply any and all monies or funds belonging or payable to ISO
which are in Bank’s possession against and on account of ISO’s obligations to SERVICERS under
this Agreement (including funding the Offset Account, the Reserve Account, the Termination
Reserve Account or funding chargebacks), whether such obligations are liquidated,
unliquidated, fixed, contingent, matured or unmatured. |
| 6.4 | | Expenses. Except as otherwise provided, each party shall bear its own
administrative costs and overhead expenses arising out of its performance of this Agreement. |
| 6.5 | | Liability for Losses. Unless any Losses are caused by SERVICERS or are attributable
to the negligence or willful misconduct of SERVICERS, SERVICERS shall have recourse from ISO,
and ISO shall fully reimburse SERVICERS, for any Losses to SERVICERS that are caused by: |
| | (a) | | Chargebacks, purchase returns, refunds, credits, adjustments, fees or Bank Card
association fines, costs and expenses related to Approved Merchants, Eligible
Merchants, or any Merchant activity hereunder; and |
| |
| | (b) | | Amounts remaining due to SERVICERS after the deduction of SERVICERS’
compensation as provided herein. |
| 6.6 | | Bank Card Association Assessments/Fees. ISO shall pay or fund when due all Bank Card
association assessments/fees, including any and all quarterly assessments/fees. |
| 6.7 | | Survival. The provisions of this Section 6 shall survive the termination or
expiration of this Agreement. |
*** Omitted pursuant to a confidential treatment request.
The confidential portion has been filed separately with the SEC.
Page 16
| 6.8 | | Assignment of Merchant Losses. SERVICERS agree that after SERVICERS have been fully
reimbursed by ISO for a Merchant loss pursuant to this Agreement, and provided that the
Merchant Account resulting in the Merchant loss has been terminated, that SERVICERS will, at
the request of ISO, assign to ISO any and all of SERVICERS’ subrogation rights under or
related to the Merchant Processing Agreement (including guarantees, security or otherwise)
related to the indebtedness of such Merchant under the Merchant Processing Agreement
(including guarantees, security or otherwise), so that ISO may pursue collection recovery
activities in connection with such Merchant loss. Any such collection recovery activities
shall be conducted in the name of ISO and shall be subject to the indemnification obligations
of ISO. Bank agrees to execute and deliver to ISO such assignment documents as reasonably
requested and required by ISO to vest such collection loss(es) recovery right to ISO and as
reasonably required in connection with such collection recovery activities. |
SECTION 7
REPRESENTATIONS AND WARRANTIES OF ISO
| | | ISO represents and warrants to SERVICERS that, as of the date of this Agreement, the
following are true and correct: |
| |
| 7.1 | | Organization and Good Standing. ISO is a Delaware corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware and has full
corporate power and authority to carry on its business as it is now being conducted. ISO is
and will be qualified as a foreign corporation in good standing under the laws of each
jurisdiction in which the conduct of its business or the ownership of its properties requires
the qualification. |
| |
| 7.2 | | Execution and Effect of Agreement. ISO has the corporate power and authority to
enter into this Agreement and the execution and delivery of this Agreement and the performance
of ISO’s obligations hereunder have been duly authorized by all necessary corporate action.
This Agreement has been duly executed and delivered by ISO and constitutes a legal, valid, and
binding obligation of ISO, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws affecting the rights of
creditors generally. |
| |
| 7.3 | | Restrictions. Neither the execution and delivery of this Agreement nor the conduct of
the Program contemplated hereby will: |
| | (a) | | Violate any of the provisions of the charter or by-laws of ISO; or |
| |
| | (b) | | Conflict with, or result in a breach of, or give rise to a right of termination
of, or accelerate the performance required by the terms of any judgment, court order or
consent decree, or any agreement, including a restrictive covenant or covenant against
competition, indenture, mortgage, or instrument to which ISO is a party or to which its
property is subject, or constitute a default thereunder, except where the conflict,
breach, right of termination, acceleration or default would not |
Page 17
| | | | prevent or have a
Material adverse effect on the conduct of the activities contemplated hereby. |
| 7.4 | | Consents. Except for filings, consents, waivers, approvals, and authorizations that
the failure to obtain or make would not have a Material adverse effect on ISO or the Program,
no filing, consent, waiver, approval, or authorization of any governmental authority or of any
third party other than Visa and MasterCard, or notice to, or filing with, any governmental
authority or any third party on the part of ISO is required in connection with the execution
and delivery of this Agreement or the conduct of the activities contemplated hereby. |
| 7.5 | | Litigation. To the knowledge of ISO and except as disclosed in public filings with
the Securities and Exchange Commission, there is no action at law or in equity, arbitration,
proceeding, or governmental investigation pending, or to the knowledge of ISO threatened, by
or before any court, any governmental or administrative agency or commission, or arbitrator,
against ISO regarding this Agreement or any of the transactions contemplated hereby that could
reasonably be expected to prevent or have a Material adverse effect on the conduct of the
activities contemplated hereby. |
SECTION 8
ADDITIONAL COVENANTS
| | (a) | | ISO expressly authorizes SERVICERS to establish a Reserve Account pursuant to
the terms and conditions set forth in this Section 8.1. The initial amount of such
Reserve Account shall be [***]. In addition, the amount of the Reserve Account may be increased by
SERVICERS from time to time based upon any reasonably anticipated risk of loss to
SERVICERS, material breach of the Agreement by ISO, or any material adverse change in
the financial condition of ISO. Such Reserve Account shall be established and
maintained at Bank. [***] |
| |
| | (b) | | The Reserve Account shall be fully funded upon five (5) Business Days’ notice
to ISO. Such Reserve Account may be funded by all or any combination of the following:
(i) one or more debits to the Offset Account or any other accounts of ISO held by Bank
or any of its Affiliates; (ii) one or more deductions or offsets to any payments
otherwise due to ISO; or (iii) ISO’s delivery to SERVICERS of a letter of credit issued
by a bank acceptable to SERVICERS and in a form acceptable to SERVICERS. |
*** Omitted pursuant to a confidential treatment request.
The confidential portion has been filed separately with the SEC.
Page 18
| | (c) | | If ISO’s funds in the Reserve Account are not sufficient to cover the
chargebacks, adjustments, fees and other charges due to SERVICERS from ISO or
Merchants, or if the funds in the Reserve Account have been released, ISO agrees to pay
SERVICERS such sums within five (5) Business Days of any such request by SERVICERS. In
the event of a failure by ISO to fund the Reserve Account, SERVICERS may fund such
Reserve Account in any of the manners set forth above. |
| |
| | (d) | | To secure ISO’s obligations to SERVICERS under this Agreement, ISO grants to
SERVICERS a lien and security interest in and to any of ISO’s funds in the Reserve
Account or otherwise related to this Agreement now or hereafter in the possession of
SERVICERS, whether now or hereafter due or to become due to ISO from SERVICERS. ISO
agrees to duly execute and deliver to SERVICERS such instruments and documents as
SERVICERS may reasonably request to perfect and confirm the lien, security interest,
right of setoff, recoupment and subordination set forth in this Agreement. |
| 8.2 | | Inspection.ISO will, at any and all reasonable times,
permit SERVICERS’ employees, agents, attorneys, auditors, or bank
regulators to inspect ISO’s place of business to audit its operations
for compliance with all Rules, laws, regulations, and directives of
any governmental regulatory agency or Bank Card association, all at
SERVICERS’ expense. |
| |
| 8.3 | | Cooperation.SERVICERS and ISO will each timely furnish
to the other any and all information and materials that the other may,
from time to time, reasonably request in connection with all matters
contemplated by this Agreement. Each party also shall take the action
as the other may, from time to time, reasonably request in order that
the purposes of this Agreement will be fully accomplished and that all
matters contemplated hereby will comply with all Rules or other
applicable statutory, regulatory or other legal requirements. ISO
shall promptly deliver to SERVICERS after receipt by ISO a copy of all
non-routine notices or correspondence that it receives from
MasterCard, Visa, or other networks or Bank Card associations, or any
other third party, which in any way relates to any Merchant’s or
ISO’s participation in MasterCard, Visa, and other networks or Bank
Card associations under this Agreement. |
| |
| 8.4 | | Compliance With Rules. ISO also covenants to the following: |
| | (a) | | ISO will obtain copies of all available Rules from Visa and MasterCard and any
other Bank Card association that makes its Rules available to ISOs. For all Rules not
reasonably available to ISO, SERVICERS will provide ISO with information regarding such
Rules and compliance therewith. ISO understands and agrees to comply fully with all
Rules and applicable laws and regulations. |
| |
| | (b) | | On an ongoing basis, ISO will regularly provide SERVICERS with the current
addresses for all its offices. |
Page 19
| | (c) | | In the event of any inconsistency between any provision of this Agreement and
the Rules, the Rules in each instance shall be afforded precedence and shall apply. |
| |
| | (d) | | ISO acknowledges and agrees that Visa and/or MasterCard are the sole and
exclusive owner of Visa and/or MasterCard marks. ISO agrees to never contest the
ownership of these marks and Visa and/or MasterCard may at any time immediately and
without advance notice prohibit ISO from using their respective marks. |
| |
| | (e) | | ISO acknowledges and agrees that Visa and/or MasterCard shall have the right,
either in law or in equity, to enforce any provision of the Rules and to prohibit ISO’s
conduct that creates a risk of injury to Visa and/or MasterCard or that may adversely
affect the integrity of Visa’s and/or MasterCard’s systems, information or both. ISO
agrees to refrain from taking any action that would have the effect of interfering with
or preventing an exercise of these rights by Visa and/or MasterCard. |
| |
| | (f) | | ISO agrees not to use any marks of Visa and/or MasterCard on its own behalf in
the furtherance of the Program. ISO also agrees not to suggest, imply or in any manner
create an impression that it is a Member or an authorized representative of Visa and/or
MasterCard or that it is other than an independent sales organization or member service
provider for a Member. Further, ISO may not create an impression that Visa and/or
MasterCard in any way endorses ISO or the Program it coordinates through SERVICERS. |
| |
| | (g) | | ISO may use one or more of Visa’s or MasterCard’s marks under the following
conditions: |
| | (i) | | The marks are used in accordance with the Rules; and |
| |
| | (ii) | | The marks are used pursuant to the express written permission
of Bank. |
| | (h) | | Except as expressly set forth herein, ISO may not subcontract, sublicense,
assign, license, franchise or in any other manner extend or transfer to any third party
any right or obligation ISO may have in connection with the Program. ISO agrees to
provide services under the Program only with ISO’s employees, Other MSP’s or IC’s in
accordance with Section 2.4. An employee of ISO is defined as an individual who, while
providing services for the Program (i) represents himself or herself as working for ISO
while using only ISO’s legal or “doing business as” name(s) as registered with Visa
and/or MasterCard, and (ii) receives compensation for services rendered for the Program
from ISO. An employee may not extend or transfer to any third party any right or
obligation the employee may have regarding the Program as an employee of ISO. ISO will
provide SERVICERS with a list of the names of all of its employees and IC’s and such
additional information as SERVICERS may reasonably request from time to time regarding
any employee or IC. ISO will conduct appropriate background checks |
Page 20
| | | | (including credit
and criminal background checks) on all employees, Other MSP’s and IC’s. |
| | (i) | | ISO further agrees to the following: |
| | (i) | | ISO will not use Visa’s and/or MasterCard’s equipment and
software (“V/MC Systems”) and Visa and/or MasterCard information identified or
reasonably understood to be confidential or proprietary (“V/MC Confidential
Information”) for anything other than to perform its duties on behalf of
SERVICERS and definitely not for its own use or for any other purpose; |
| |
| | (ii) | | To treat the V/MC Systems and V/MC Confidential Information in
at least as careful and confidential a manner as ISO treats its own or the
SERVICERS’ systems and confidential or proprietary information; |
| |
| | (iii) | | To acknowledge that access to the V/MC Systems and V/MC
Confidential Information does not convey to ISO any right, title, interest or
copyright therein or any license to use, sell, exploit, copy or develop them
further; |
| |
| | (iv) | | To limit access to the V/MC Systems and V/MC Confidential
Information to only those ISO employees and Other MSP’s with a need to have
access for the ISO to perform services under the Program and to implement and
maintain reasonable and appropriate safeguards to prevent unauthorized access
to or use of the V/MC Systems or V/MC Confidential Information; |
| |
| | (v) | | Solely with respect to the Program and this Agreement, upon
request by SERVICERS, or, absent such requests, upon termination of ISO’s
performance under the Program, to immediately cease any and all use of V/MC
Systems and promptly thereafter deliver to SERVICERS all V/MC Confidential
Information then in the possession or control of ISO or, upon request by Visa
and/or MasterCard, to immediately cease any and all use of
the V/MC Systems and promptly thereafter deliver all V/MC Confidential
Information that was provided by SERVICERS then in its possession or control
to Visa and/or MasterCard; and |
| |
| | (vi) | | To immediately advise both SERVICERS and Visa and/or MasterCard
if any unauthorized person or external entity seeks access to the V/MC Systems
or V/MC Confidential Information whether by legal proceeding or otherwise. |
| | (j) | | Visa and/or MasterCard may at any time conduct financial and procedural audits
of ISO. ISO agrees to cooperate with and promptly supply Visa and/or MasterCard with
all information and material requested. |
Page 21
| | (k) | | ISO understands that all Program Materials including Merchant Applications,
Merchant Processing Agreements, Merchant statements, and Promotional Materials (i) must
be approved by SERVICERS before use, such approval not to unreasonably withheld or
delayed beyond [***] [***] days, and (ii) may not state or imply that ISO is
participating in or conducting any activity precluded by the Rules. |
| |
| | (l) | | ISO recognizes that SERVICERS must approve (in advance) any fee associated with
the Program which must be clearly and conspicuously disclosed in writing to the
Merchant prior to any payment or Application. |
| 8.5 | | Registration as ISO. ISO and each Other MSP shall at all times, at ISO’s and/or
each Other MSP’s cost and expense, maintain in effect during the term of this Agreement, a
valid and effective registration as an independent service organization with Visa and a member
service provider with MasterCard and shall provide any information as Visa and MasterCard may
reasonably request in connection therewith or in connection with the services of ISO
hereunder, and shall provide SERVICERS the information as it may reasonably request concerning
compliance with all applicable Rules, laws, regulations and the requirements set forth herein
in connection with this Agreement. The parties hereto will work together expeditiously and in
good faith to register and maintain the registration of ISO and each Other MSP with the
appropriate Bank Card associations as required under the Rules. |
| |
| 8.6 | | Xxxx Restriction. ISO shall not make any use of SERVICERS’ Marks or any other
Intellectual Property without SERVICERS’ prior written consent, which will not be unreasonably
withheld or delayed beyond [***] [***] days. |
| |
| 8.7 | | Financial Statements/Audit Rights. ISO shall make available (whether through public
filings or directly) SERVICERS with annual audited financial statements prepared by an
independent auditing firm within 90 days of the end of each fiscal year (and shall make
available to SERVICERS quarterly financial statements upon request of SERVICERS). In
addition, ISO will provide any shareholder/owner personal financial information as
required by the Rules. ISO will, at any and all reasonable times, permit SERVICERS’
employees, agents and/or auditors to inspect ISO’s books and records at SERVICERS’ expense
prior request and notice and if for a particular need. |
SECTION 9
CONFIDENTIAL INFORMATION
| 9.1 | | Confidential Information. Confidential Information is non-public and proprietary
information relating to the business of ISO or its Affiliates that SERVICERS and their
Affiliates acquire during the term of this Agreement, and information relating to the business
of SERVICERS and their Affiliates. It includes, but is not limited to, the following, whether
used in, or to be used in, the business of ISO or SERVICERS: physical systems for the
operation of the business; all present and planned strategies, business plans, and
projections; all market and sales and marketing information; all |
*** Omitted pursuant to a confidential treatment request.
The confidential portion has been filed separately with the SEC.
Page 22
| | | financial, accounting, and
credit information; and the terms and conditions of this Agreement. Neither party will
disclose, furnish, sell, convey, or use for any purpose other than as contemplated under this
Agreement any of the other parties’ Confidential Information or materials without written
authorization. For the avoidance of doubt, the parties acknowledge and agree that all
Merchant information is the Confidential Information of ISO and (i) may not be used by
SERVICERS for any purpose other than to provide the services contemplated hereunder during the
term of this Agreement and thereafter, and (ii) will not be used by SERVICERS, directly or
indirectly, to solicit any Merchants in the Merchant Portfolio. |
| |
| 9.2 | | Exclusions. Nothing in this Section 9 shall restrict either party with respect to
Confidential Information which: (a) the receiving party can demonstrate was rightfully
possessed by it before it received the information from the disclosing party; (b) was in the
public domain prior to the date of this Agreement or subsequently becomes publicly available
through no fault of the receiving party or any person acting on its behalf; (c) was previously
received by the receiving party from a third party or is subsequently furnished rightfully to
the receiving party by a third party not known to be under restrictions on use or disclosure;
(d) is independently developed by such party; (e) is required to be disclosed by the Rules,
law, regulation or court order, provided that the disclosing party will exercise reasonable
efforts to notify the other party prior to disclosure; or (f) is required to be disclosed to
comply with or to enforce the terms of this Agreement. |
| |
| 9.3 | | Ownership of Work Product. Each party shall have and retain all ownership rights
(including ownership of any Marks) in the work product developed for the implementation of the
Program, including the Application, Merchant Processing Agreement and Promotional Materials
that it creates, prepares or produces in connection with this Agreement, and all the work
products shall remain the exclusive property of that party. Upon termination of the Agreement,
each party shall immediately cease using any materials using the other’s Marks or Intellectual
Property, and shall immediately destroy all such materials. |
| |
| 9.4 | | Remedy; Survival. If any party breaches this Section 9, the non-breaching party will
suffer irreparable harm and the total amount of monetary damages for any injury to such party
will be impossible to calculate and therefore an inadequate remedy. Accordingly, the
non-breaching party may (i) seek temporary and permanent injunctive relief against the
breaching party or (ii) exercise any other rights and seek any other remedies to which the
non-breaching party may be entitled to at law, in equity and under this Agreement for any
violation of this Section 9. The provisions of this Section 9 shall survive the termination
or expiration of this Agreement. |
SECTION 10
TERM AND TERMINATION
| 10.1 | | Initial Term. The initial term of this Agreement shall be four (4) Processing Years
commencing on the Effective Date of this Agreement and ending on June 30, 2010 unless |
Page 23
| | | terminated earlier as provided in this Section 10. Thereafter, this Agreement shall
automatically continue in effect until either party gives the other at least six (6) months
prior written notice of termination. |
| |
| 10.2 | | Termination by SERVICERS. SERVICERS may terminate this Agreement prior to its
expiration for cause upon prior written notice to ISO as follows: |
| | (a) | | Upon a Material breach of any representation, warranty or covenant in this
Agreement by ISO which is not cured by ISO within sixty (60) days of receipt of written
notice from SERVICERS; provided however, that if ISO is attempting in good faith to
cure such breach within said sixty (60) day cure period but the nature of the breach
prevents a cure within sixty (60) days, then ISO shall be allotted an additional number
of days to cure, provided the total number of days of the cure period shall be no
greater than one hundred twenty (120) days; |
| |
| | (b) | | Upon a breach of any Material Rule by ISO, or repeated breach of any Rule by
ISO which is not cured by ISO within sixty (60) days of receipt of written notice from
SERVICERS; provided however, that if ISO is attempting in good faith to cure such
breach within said sixty (60) day cure period but the nature of the breach prevents a
cure within sixty (60) days, then ISO shall be allotted an additional number of days to
cure, provided the total number of days of the cure period shall be no greater than one
hundred twenty (120) days; |
| |
| | (c) | | Upon any commission of any fraudulent activity by ISO, or the illegal activity
of ISO’s employees in the performance of their duties in connection with this
Agreement; |
| |
| | (d) | | Upon any failure by ISO to pay (or make arrangements to pay that are acceptable
to SERVICERS) any amount due under this Agreement to SERVICERS which does not give rise
to the right to terminate under any other provision of this
Agreement within ten (10) Business Days after written notice to ISO of its failure
to pay the amount; |
| |
| | (e) | | Upon the insolvency or bankruptcy of ISO; |
| |
| | (f) | | Upon a Material adverse change in the business or financial condition of ISO; |
| |
| | (g) | | Upon an assignment of this Agreement by ISO without SERVICERS’ prior written
consent; |
| |
| | (h) | | Upon the failure by ISO to maintain good standing as an “independent sales
organization” with Visa or a “member services provider” with MasterCard; |
| |
| | (i) | | If SERVICERS are required by a governmental or regulatory body or agency or by
any Bank Card association to terminate the Services on behalf of ISO with as much prior
notice as is practicable under the circumstances; |
Page 24
| | (j) | | If ISO fails to fund the Offset Account or the Reserve Account as required
under this Agreement within ten (10) Business Days after written notice to ISO of its
failure to pay the amount; |
| |
| | (k) | | Upon the termination of the Service Agreement for any reason with one hundred
eighty (180) days prior written notice to ISO; or |
| |
| | (l) | | Upon a Change of Control of ISO with one hundred eighty (180) days prior
written notice to ISO, unless the SERVICERS had previously consented to such change in
control. |
| 10.3 | | Termination by ISO. ISO may terminate this Agreement prior to its expiration for
cause upon prior written notice to SERVICERS as follows: |
| | (a) | | Upon a Material breach of any representation, warranty or covenant in this
Agreement by SERVICERS which is not cured by SERVICERS within sixty (60) days of
receipt of written notice from ISO; provided however, that if SERVICES are attempting
in good faith to cure such breach within said sixty (60) day cure period but the nature
of the breach prevents a cure within sixty (60) days, then SERVICERS shall be allotted
an additional number of days to cure, provided the total number of days of the cure
period shall be no greater than one hundred twenty (120) days; |
| |
| | (b) | | Upon any failure by SERVICERS to pay any amount due under this Agreement which
does not give rise to the right to terminate under any other provision of this
Agreement within five (5) Business Days after written notice to SERVICERS of its
failure to pay the amount; |
| |
| | (c) | | Upon the insolvency or bankruptcy of either of the SERVICERS; |
| |
| | (d) | | Upon the termination of the Service Agreement for any reason; |
| |
| | (e) | | Upon a Material adverse change in the business or financial condition of either
of SERVICERS; |
| |
| | (f) | | Upon an assignment of this Agreement by SERVICERS without ISO’s prior written
consent; |
| |
| | (g) | | Upon the failure by SERVICERS to maintain good standing with Visa or a
MasterCard; |
| |
| | (h) | | If required by a governmental or regulatory body or agency or by any Bank Card
association to terminate; |
| |
| | (i) | | Upon cessation of Bank Card operations by SERVICERS; or |
Page 25
| | (j) | | At any time upon one hundred eighty (180) days prior written notice to the
SERVICERS with no penalty. |
| 10.4 | | Effect of Termination. |
| | (a) | | Upon the expiration or termination of this Agreement for any reason, at the
direction of ISO and pursuant to the plan of Deconversion, SERVICERS will transfer and
assign all their interest in the Merchant Portfolio (including Merchant Processing
Agreements and Merchant Accounts) and the dedicated BINs/ICAs to a Visa and MasterCard
Member designated by ISO, provided first that: (a) all amounts due (or estimated to
become due) in connection with each Merchant Processing Agreement and under this
Agreement have been paid to SERVICERS; (b) the Termination Reserve Account has been
adequately funded; (c) ISO provides full written indemnities to SERVICERS regarding
actual and potential losses or other obligations arising out of operation of the
Program or arising out of, or related to, this Agreement or any Merchant Processing
Agreement; and (d) the Program Transfer complies with all applicable Rules, laws and
regulations (the “Program Transfer”). [***] |
| |
| | (b) | | Until the completion of the Deconversion of the Merchant Portfolio, the parties
shall continue to operate under the terms and conditions of this Agreement; provided,
however, that upon the effective date of expiration or termination of this Agreement,
ISO will promptly discontinue its promotion and recommendation of the Program and will
cease to board new accounts on Bank’s BINs and ICAs or
for sponsorship by Bank. ISO will reimburse SERVICERS for any Deconversion pursuant
to the plan for Deconversion, regardless of whether such Deconversion occurs before
or after the expiration or termination of this Agreement. ISO shall continue to hold
all risks associated with transactions processed by SERVICERS prior to the effective
date of Deconversion of each respective Merchant in the Merchant Portfolio,
including all risk relating to chargebacks and fraudulent transactions. ISO shall
pay SERVICERS any amounts associated with such risks immediately upon demand. |
| 10.5 | | Termination Reserve Account. Within ten (10) Business Days of the issuing of a
notice of termination by any party, ISO shall fund a Termination Reserve Account. Except as
specifically set forth otherwise in this Section 10.5, all provisions of Section 8.1 of this
Agreement with regard to the Reserve Account shall also apply to the Termination Reserve
Account. The amount of the Termination Reserve Account shall be the greater of (i) the most
recent required amount for the Reserve Account prior to termination, or (ii) the amount
calculated as follows: |
*** Omitted pursuant to a confidential treatment request.
The confidential portion has been filed separately with the SEC.
Page 26
| | (a) | | The amount of all chargebacks during the [***] [***] months preceding termination,
plus |
| |
| | (b) | | The amount of all assessed Bank Card association fines or penalties and all
fees and contingent fees which are or shall become due to SERVICERS from ISO, plus |
| |
| | (c) | | The estimated maximum amount of any known or likely significant loss events
(defined as a credit or fraud loss that is likely to exceed $[***]). |
| | | Upon termination, any balance in the Reserve Account shall be transferred to, and be applied
toward, the Termination Reserve Account. The Termination Reserve Account will be held by
SERVICERS until the completion of the Program Transfer or for such longer period of time as
is consistent with SERVICERS’ liability for Bank Card transactions in accordance with the
Rules. SERVICERS will reduce the Termination Reserve Account balance to reflect any
reductions in ISO’s then-potential liability as the Program Transfer and Deconversion
progress. [***] |
SECTION 11
INDEMNIFICATION ; EXCLUSIONS ; LIMITATIONS
| 11.1 | | ISO’s Indemnification. ISO shall indemnify, defend, protect, and hold SERVICERS,
their Affiliates, and their respective officers, directors, employees, attorneys, and
permitted assigns, harmless from and against any Losses and credit/fraud losses arising
directly from: |
| | (a) | | Any failure by ISO to comply with any Material term or condition of this
Agreement applicable to ISO, or the failure of any warranty or representations made by
ISO in this Agreement to be true and correct; |
| |
| | (b) | | Any claim for which ISO has otherwise agreed herein to pay or indemnify
SERVICERS; |
| |
| | (c) | | Credit or fraud losses, regardless of whether SERVICERS performed any
underwriting, credit review, periodic review or fraud monitoring reviews on their own
behalf; |
| |
| | (d) | | Any negligence, misrepresentation or willful misconduct on the part of ISO or
any of its employees, agents, Other MSP’s or IC’s related to this Agreement; and |
| |
| | (e) | | Any claim by any third party related to this Agreement of a Merchant in the
Merchant Portfolio that ISO’s Intellectual Property violates or infringes any
proprietary right of such third party, without any limitation of liability whatsoever. |
*** Omitted pursuant to a confidential treatment request.
The confidential portion has been filed separately with the SEC.
Page 27
| 11.2 | | SERVICERS’ Indemnification. SERVICERS, jointly and severally, shall indemnify,
defend, protect, and hold ISO, its Affiliates and their respective officers, directors,
employees, attorneys, permitted assigns, Other MSP’s and IC’s harmless from and against any
Losses and credit/fraud losses arising directly from: |
| | (a) | | Any failure by SERVICERS to comply with any Material term or condition of this
Agreement applicable to SERVICERS, or the failure of any warranty or representations
made by SERVICERS in this Agreement to be true and correct; |
| |
| | (b) | | Any claim for which SERVICERS have otherwise agreed herein to pay or indemnify
ISO; |
| |
| | (c) | | Any Losses caused by SERVICERS’ breach of a Merchant Processing Agreement; |
| |
| | (d) | | Any negligence, misrepresentation or willful misconduct on the part of
SERVICERS or any of their employees or agents related to this Agreement; and |
| |
| | (e) | | Any claim by any third party related to this Agreement of a Merchant in the
Merchant Portfolio that SERVICERS’ Intellectual Property violates or infringes any
proprietary right of such third party, without any limitation of liability whatsoever. |
| 11.3 | | Exclusion of Warranties, Limitations of Liability. |
| | (a) | | Except as expressly provided in this Agreement, SERVICERS specifically disclaim
all warranties of any kind, express or implied, including any warranties regarding
merchantability, fitness for a particular purpose, non-infringement or otherwise
(regardless of any course of dealing, custom or usage of trade), arising out of or
related to this Agreement, which are hereby excluded by agreement of the parties.
The parties agree that this Agreement is a service agreement and is not subject to
the provisions of the Uniform Commercial Code. |
| |
| | (b) | | Notwithstanding anything in this Agreement to the contrary, in no event shall
any party hereto, their respective Affiliates or any of their respective directors,
officers, employees, agents or subcontractors, be liable under any theory of tort,
contract, strict liability or other legal theory for lost profits, lost revenues, lost
business opportunities, exemplary, punitive, special, incidental, indirect or
consequential damages, each of which is hereby excluded by agreement of the parties,
regardless of whether the damages were foreseeable or whether any party or any entity
has been advised of the possibility of the damages. |
| |
| | (c) | | Notwithstanding anything in this Agreement to the contrary, the cumulative
liability of each of SERVICERS and ISO for all Losses, claims, suits, controversies,
breaches or damages arising out of or related to this Agreement |
Page 28
| | | | regardless of the form
of action or legal theory relating to events in any one Processing Year shall not
exceed [***] [***] times the amount of clearing/sponsorship fees paid to SERVICERS by ISO
pursuant to this Agreement during the immediately preceding [***] [***] full months;
provided, however, that this limitation shall not apply to either party’s obligation to
indemnify the other for credit/fraud losses or Losses arising from or related to the
indemnifying party’s (or its agents, representatives, Merchants, Other MSP’s or IC’s)
failure to comply with Rules. |
| |
| | (d) | | The parties acknowledge and agree that no party will be obligated to indemnify
the other party to the extent that the liability, lawsuit, penalty, claim, demand or
Loss resulted from the negligence or intentional misconduct of the party to be
indemnified. |
| |
| | (e) | | Notwithstanding anything in this Agreement to the contrary, neither ISO nor
SERVICERS nor their Affiliates shall have any liability under this Agreement for breach
of their respective duties and obligations under this Agreement to the extent such
breach was caused by labor disputes, strikes, acts of God, floods, terrorist acts,
lightning, severe weather, shortages of materials, rationing, utility or communication
failures or interruptions, failure of MasterCard, Visa, and other networks or Bank Card
associations, earthquakes, war, revolution, civil commotion, blockade, embargo, or any
law, order, proclamation, regulation, ordinance, demand or requirement having legal
effect of any government or any judicial authority or representative of any such
government, or any other act, omission or cause whatsoever, whether similar or
dissimilar to those referred to in this clause, which are beyond ISO’s, SERVICERS’ or
their Affiliates reasonable control. |
| 11.4 | | Survival. The provisions of this Section 11 shall survive the termination or
expiration of this Agreement. |
SECTION 12
MISCELLANEOUS
| 12.1 | | Books and Records. SERVICERS shall provide ISO promptly with monthly reports showing
for the month the total number of active accounts and inactive accounts, the net sales
processed for each Approved Merchant (provided ISO is either a party to the Merchant
Processing Agreement (or assignee of a named party) or has obtained such Merchant’s written
authorization to obtain such information and SERVICERS’ disclosure is not prohibited by any
Rule, law, regulation or agreement with a governmental agency) and the net sales processed for
all Approved Merchants. |
| 12.2 | | Relationship of the Parties. SERVICERS and ISO agree that in performing their
responsibilities pursuant to this Agreement they are in the position of independent
contractors. This Agreement is not intended to create, nor does it create and shall not be
construed to create, a relationship of partnership or joint venture or agency or any |
*** Omitted pursuant to a confidential treatment request.
The confidential portion has been filed separately with the SEC.
Page 29
| | | association for profit between SERVICERS and ISO. ISO is not authorized hereunder to hold
itself out as an agent of SERVICERS or to inform or represent to any person that ISO has
authority to bind or obligate SERVICERS or to otherwise act on behalf of SERVICERS except as
expressly set forth herein. ISO shall not make any representation or warranty, or create any
liability or potential liability on behalf of SERVICERS except as expressly set forth herein. |
| |
| 12.3 | | No Third Party Beneficiaries. Nothing in this Agreement is intended to confer upon
any person or entity other than the parties and their Affiliates any rights or remedies. |
| |
| 12.4 | | Assignment and Transfer. Except as expressly set forth herein, ISO shall not assign
or otherwise transfer this Agreement or any of its rights or obligations hereunder, by
operation of law or otherwise, or contract with any third party (other than the third parties
named herein) to perform any of its responsibilities or obligations relating to this Agreement
without the prior written consent of SERVICERS, which consent will not be unreasonably
withheld. In addition, ISO shall provide written notice to SERVICERS within three (3)
Business Days of any Change of Control of ISO. |
| |
| 12.5 | | Notices. Any notice, request, consent, waiver or other communication required or
permitted to be given hereunder shall be effective only if in writing and shall be deemed
sufficiently given only if delivered in person or sent by certified, registered, or overnight
mail or overnight courier service, postage prepaid, return receipt requested, addressed as
follows: |
If to FDMS:
First Data Merchant Services Corporation
0000 Xxxx Xxxxxx
XX-00
Xxxxx, XX 00000
Attn: VP – Omaha Processing
Facsimile Number: 000-000-0000
With a copy to:
First Data Merchant Services Corporation
00000 X. Xxxxxxx Xxxxxx, Xxxxx X0-X
Xxxxxxxxx, XX 00000
Attn: General Counsel
Facsimile Number: 000-000-0000
If to Bank:
Xxxxx Fargo Bank, N.A.
0000 Xxxxxxx Xxx
Xxxxxx Xxxxx, XX 00000
Page 30
Attn: EVP Merchant Card Services
Facsimile Number:
If to ISO:
iPayment, Inc.
00000 Xxxx Xxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Operations Manager
Facsimile Number:
With a copy to:
iPayment, Inc.
00 Xxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: General Counsel
Facsimile: 000-000-0000
| | | or to such other person or address as either party may designate by notice given to the
other party as provided herein. The notice or communication shall be deemed to have been
given as of the date so delivered. |
| |
| 12.6 | | Prior Agreements, Entire Agreement, and Modifications. This Agreement, along with
the Service Agreement, supersedes all prior agreements, whether verbal or in writing, and
contains the entire Agreement between the parties regarding all matters, issues and claims
relating to the subject matter of this Agreement, and any other written documents exchanged,
verbal agreements reached and representations made by or between the parties in the course
of the negotiation of this Agreement. This Agreement may be changed only by a written
instrument specifically stating that it modifies this Agreement and it must be signed by all
parties. |
| |
| 12.7 | | Applicable Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without giving effect to New York conflict laws. |
| |
| 12.8 | | Waivers. No failure or delay by any party to exercise, and no course of dealing
regarding any right of the party concerning an obligation of any other party to this
Agreement, shall operate as a waiver unless agreed to in writing by all parties. The parties
hereto waive their right to a jury trial in the event of any legal proceedings between them. |
| |
| 12.9 | | Binding Effect, Remedies. This Agreement will not become legally binding and may not
be enforced by any party until and unless executed by all parties hereto. This Agreement and
the rights and obligations created hereunder shall be binding upon and inure solely to the
benefit of the parties and their respective successors and permitted assigns, and no other
person or legal entity shall acquire or have any rights under or by |
Page 31
| | | virtue of this Agreement.
The remedies provided for in this Agreement shall be cumulative in nature, not exclusive, and
shall be in addition to any other remedy allowed in law or equity. |
| |
| 12.10 | | Severability. If any provision of this Agreement is held illegal, invalid, void, or
unenforceable in any jurisdiction where this Agreement or any part thereof is to be performed
by reason of any rule of law, administrative or judicial proceeding or public policy, the
provision shall be deemed deleted and the remaining provisions of this Agreement shall remain
valid and binding. |
| |
| 12.11 | | Headings. The Section headings of this Agreement are inserted as a matter of
convenience only and shall in no way define, limit, extend or describe the scope of this
Agreement or the intent of any provisions herein. |
| |
| 12.12 | | Counterparts. Provided that all parties execute a copy of this Agreement, this
Agreement may be executed in counterparts, each of which shall be deemed an original and all
of which together shall constitute one and the same instrument. The parties acknowledge that
delivery of executed copies of this Agreement may be effected by facsimile or other comparable
means, as well as by delivery of manually signed copies. |
| |
| 12.13 | | Construction. As used in this Agreement, any reference to the masculine, feminine or
neuter gender shall include all genders, the plural shall include the singular, and the
singular shall include the plural. |
| |
| 12.14 | | Exhibits. All exhibits to this Agreement are incorporated by reference with the
same force and effect as if fully set forth herein. This Agreement shall be given full force
and
effect without the exhibits or as to those exhibits that are attached, in the event less
than all of the exhibits referenced herein are in fact attached. |
| |
| 12.15 | | Termination of Other Agreements. The following agreements are herby terminated
without penalty to any party and are of no further force and effect: (i) the TS ISO Agreement;
and (ii) the PCS ISO Agreement; provided, however, that neither the termination of the TS ISO
Agreement or the PCS ISO Agreement nor anything contained in this Agreement shall act as a
waiver or otherwise preclude FDMS from reconciling and/or collecting any billing, residual or
other fee-related issues under either the TS ISO Agreement or the PCS ISO Agreement except
where otherwise agreed to by FDMS. |
IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.
iPAYMENT, INC.
By: \s\ Xxxx Daily
Name: Xxxx Daily
Page 32
Title: Chief Executive Officer
FIRST DATA MERCHANT SERVICES CORPORATION
By: \s\ Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Title: Senior Vice President
XXXXX FARGO BANK, N.A.
By: \s\ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Vice President
Page 33
[***]
*** Omitted pursuant to a confidential treatment request.
The confidential portion has been filed separately with the SEC.
Exhibit A, Page 1
EXHIBIT B
UNACCEPTABLE BUSINESS
The following industries are considered unacceptable merchant processing candidates due to
Association prohibition; illegal or likely to be deemed illegal activity; high fraud potential;
high potential for excessive chargebacks; or excessive risk exposure.
| | • | | All sexually oriented or pornographic merchants: |
| | | |
| — Adult telephone conversations or Internet
| | – Modeling agencies |
|
| | |
| — Massage parlors
| | – Adult book stores |
|
| | |
| — Misc. entertainment (not elsewhere classified)
| | – Topless bars/clubs |
| | • | | Any illegal products/services |
| |
| | • | | Any service providing peripheral support of illegal activities (i.e., drugs) |
| |
| | • | | Chain letters |
| |
| | • | | Collection agencies or firms involved in recovering/collecting past due receivables |
| |
| | • | | Drug paraphernalia |
| |
| | • | | Free gift, prize, sweepstakes or contest as an inducement to purchase a
product/service |
| |
| | • | | “Get-rich-quick” schemes |
| |
| | • | | Lotteries and/or illegal gambling, including Internet gambling |
| |
| | • | | Sports forecasting or odds-making |
| |
| | • | | Merchants offering rebates or special incentives |
| |
| | • | | Credit card protection (including identity theft protection) |
| |
| | • | | Extended warranty companies |
| |
| | • | | Non-face to face tobacco sales |
| |
| | • | | Non-face to face prescription drug sales |
| |
| | • | | Non-face to face sales of firearms |
| |
| | • | | Aggregators/Internet Payment Service Providers/Third Party Payment Processors |
| |
| | • | | Audio/Video Text |
| |
| | • | | Airlines |
| |
| | • | | Cruise lines |
| |
| | • | | Travel Agents/Tour Operators |
| |
| | • | | Money transfer services |
| |
| | • | | Check cashing |
| |
| | • | | Currency exchange |
| |
| | • | | Dating Services |
| |
| | • | | Pseudo-pharmaceuticals (anti-aging pills, sex nutrients, etc.) |
| |
| | • | | Outbound telemarketing |
| |
| | • | | “Up-sell” Merchants |
Exhibit B, Page 1
EXHIBIT C
APPLICATION MATERIALS
See Attached.
Exhibit C, Page 1
EXHIBIT D
PROGRAM STANDARDS
See Attached.
Exhibit D, Page 1
EXHIBIT E
LIST OF CURRENT BINs/ICAs and CURRENTLY ACTIVE OTHER MSP’s and IC’s
See attached.
Exhibit E, Page 1
EXHIBIT F
HIGH RISK MERCHANT LIST
(Not Elsewhere Classified As Unqualified / Unacceptable)
| | | | | |
| MCC | | MERCHANT TYPE |
| ALL
| | Internet Merchants
|
| | | | |
|
| ALL
| | Mail Order/ Telephone Order Merchants
|
| | | | |
|
| ALL
| | Merchants Engaged In Extended Delivery
|
| | | | |
|
| | 2741 | | | Printing and Publishing Services — (Wholesale)
|
| | | | |
|
| | 2791 | | | Typesetting, Plate Making & Related Services-(Wholesale)
|
| | | | |
|
| | 2842 | | | Sanitation, Polishing & Specialty Cleaning Preparations
|
| | | | |
|
| | 4121 | | | Limousines, Taxis, Cabs
|
| | | | |
|
| | 4784 | | | Bridge and Tolls Fees
|
| | | | |
|
| | 4812 | | | Telecommunication Equipment and Telephone Sales, Beepers, Pagers,
Paging Equipment, Cell Phones
|
| | | | |
|
| | 4814 | | | Telephone Services (Billing), Local and Long Distance
Telecommunication Services, Cellular Telephone Services
|
| | | | |
|
| | 4815 | | | VisaPhone / MasterPhone
|
| | | | |
|
| | 4816 | | | Computer Network/Information Services. Internet Service Providers,
Electronic Bulletin Boards
|
| | | | |
|
| | 4821 | | | Cablegrams, Telegrams
|
| | | | |
|
| | 4899 | | | Cable and Other Pay Television Services
|
| | | | |
|
| | 5013 | | | Parts — Motor Vehicle Supplies, New Parts — (Wholesale)
|
| | | | |
|
| | 5021 | | | Office, Commercial Furniture — (Wholesale)
|
| | | | |
|
| | 5039 | | | Construction Material — not elsewhere classified –(Wholesale)
|
| | | | |
|
| | 5044 | | | Copy Services — Photographic, Photocopy, Microfilm Supplies-
(Wholesale)
|
| | | | |
|
| | 5045 | | | Computer, Computer Peripheral Equipment and Software — (Wholesale)
|
| | | | |
|
| | 5046 | | | Commercial Equipment — not Elsewhere classified (Wholesale)
|
| | | | |
|
| | 5047 | | | Equipment — Medical, Dental, Ophthalmic, Orthopedic, Hospital
Equipment, Supplies — (Wholesale)
|
| | | | |
|
| | 5051 | | | Metal Service Centers and Offices — non-precious (Wholesale)
|
| | | | |
|
| | 5065 | | | Parts — Electrical, Equipment — (Wholesale)
|
| | | | |
|
| | 5072 | | | Hardware Equipment and Supplies — (Wholesale)
|
| | | | |
|
| | 5074 | | | Equipment — Heating Equipment, Supplies, Water Conditioning,
Purification, Softening — (Wholesale)
|
| | | | |
|
| | 5085 | | | Industrial Supplies -Not elsewhere classified (Wholesale)
|
| | | | |
|
| | 5094 | | | Gemstones, Precious Stones, Metals, Watches, Jewelry (Wholesale)
|
| | | | |
|
| | 5099 | | | Durable Goods Not Elsewhere Classified (Wholesale)
|
Exhibit F, Page 1
| | | | | |
| MCC | | MERCHANT TYPE |
| | 5111 | | | Paper — Writing, Printing, Stationery, Office Supplies — (Wholesale)
|
| | | | |
|
| | 5122 | | | Pharmaceuticals — (Wholesale)
|
| | | | |
|
| | 5131 | | | Fabrics and Dry Goods — (Wholesale)
|
| | | | |
|
| | 5137 | | | Commercial Work Clothing and Uniform — (Wholesale)
|
| | | | |
|
| | 5139 | | | Footwear — Commercial (Wholesale)
|
| | | | |
|
| | 5169 | | | Chemicals & Allied products — (Wholesale)
|
| | | | |
|
| | 5172 | | | Petroleum and Petroleum Products — (Wholesale)
|
| | | | |
|
| | 5192 | | | Books, Periodicals & Newspapers — (Wholesale)
|
| | | | |
|
| | 5193 | | | Florist Supplies, Nursery Stock and Flowers — (Wholesale)
|
| | | | |
|
| | 5198 | | | Paints, Varnishes and Supplies — (Wholesale)
|
| | | | |
|
| | 5199 | | | Non-Durable Goods — Not Elsewhere Classified (Wholesale)
|
| | | | |
|
| | 5521 | | | Used Car & Truck Dealers
|
| | | | |
|
| | 5712 | | | Furniture, Home Furnishing, Bedding, Mattress Stores
|
| | | | |
|
| | 5713 | | | Carpet, Rugs, Floor Covering Stores
|
| | | | |
|
| | 5719 | | | Miscellaneous Home Furnishing Specialty Stores
|
| | | | |
|
| | 5732 | | | Computers, Electronics, Electronic Stores, Electronic Parts
|
| | | | |
|
| | 5734 | | | Computer Software
|
| | | | |
|
| | 5932 | | | Antiques, Collectible, Memorabilia Stores
|
| | | | |
|
| | 5933 | | | Pawnbrokers
|
| | | | |
|
| | 5937 | | | Antique Reproductions
|
| | | | |
|
| | 5946 | | | Camera & Photographic Supply Stores
|
| | | | |
|
| | 5960 | | | Direct Marketing — Insurance Services.
|
| | | | |
|
| | 5963 | | | Door-To-Door Sales
|
| | | | |
|
| | 5968 | | | Direct Marketing — Continuity/Subscription Merchant.
|
| | | | |
|
| | 5969 | | | Direct Marketing — Other Direct Marketers (Not Elsewhere Classified)
Including Infomercials
|
| | | | |
|
| | 5972 | | | Stamp, Coin Stores, Stamp Collecting — Philatelic, Numismatic Supplies
|
| | | | |
|
| | 6211 | | | Securities Brokers, Mutual Funds, Stocks, Commodities, Bonds
|
| | | | |
|
| | 6300 | | | Insurance Sales, Underwriting, and Premiums
|
| | | | |
|
| | 6513 | | | Real Estate Agents, Brokers, Managers
|
| | | | |
|
| | 7032 | | | Camps — Sporting, Recreational
|
| | | | |
|
| | 7033 | | | Camping — Trailer Parks, Campgrounds
|
| | | | |
|
| | 7273 | | | Dating / Escort Services
|
| | | | |
|
| | 7297 | | | Massage Parlors
|
| | | | |
|
| | 7298 | | | Health & Beauty Spas
|
| | | | |
|
| | 7372 | | | Computer Programming, Data Processing, and Integrated Systems Design
Services
|
| | | | |
|
| | 7375 | | | Information Retrieval Services
|
| | | | |
|
| | 7379 | | | Computer Maintenance, Repair & Services — (Wholesale)
|
| | | | |
|
| | 7829 | | | Motion Picture and Video Tape Production and Distribution — (Wholesale)
|
| | | | |
|
| | 7922 | | | Theatrical Producers/Productions (except Motion Pictures) and Ticket
Agencies
|
Exhibit F, Page 2
| | | | | |
| MCC | | MERCHANT TYPE |
| | 7929 | | | Bands, Orchestras, and Miscellaneous Entertainers, Not Elsewhere
Classified
|
| | | | |
|
| | 7941 | | | Commercial Sports, Professional Sports Clubs, Athletic Fields, and
Sports Promoters
|
| | | | |
|
| | 7997 | | | Health Clubs, Country Clubs, Membership (Athletic, Recreation,
Sports), Private Golf Courses
|
| | | | |
|
| | 8241 | | | Correspondence School
|
| | | | |
|
| | 8244 | | | Business & Secretarial Schools
|
| | | | |
|
| | 8249 | | | Trade & Vocational Schools
|
| | | | |
|
| | 8299 | | | Schools & Educational Services-Not Elsewhere Classified
|
| | | | |
|
| | 8398 | | | Organizations — Charitable, Social Service, Non-Political
|
| | | | |
|
| | 8641 | | | Associations — Civic, Social. Fraternal Associations
|
| | | | |
|
| | 8651 | | | Political Organizations
|
| | | | |
|
| | 8661 | | | Religious Organizations
|
| | | | |
|
| | 8675 | | | Automobile Associations, Automobile Clubs
|
| | | | |
|
| | 8699 | | | Membership Organizations — Not Elsewhere Classified
|
| | | | |
|
| | 8734 | | | Testing Laboratories (Non-Medical)
|
| | | | |
|
| | 9211 | | | Court Costs, Including Alimony, Child Support
|
| | | | |
|
| | 9222 | | | Fines
|
| | | | |
|
| | 9223 | | | Bail, Bond Payments
|
| | | | |
|
| | 9311 | | | Tax Payments
|
| | | | |
|
| | 9399 | | | Government Services — Not Elsewhere Classified
|
| | | | |
|
| | 9401 | | | Food Stamps
|
| | | | |
|
| | 9402 | | | Postal Services — U.S. Government
|
| | | | |
|
| | 9700 | | | Automated Referral Service
|
Exhibit F, Page 3
EXHIBIT G
ADDITIONAL TERMS AND CONDITIONS FOR
POS NETWORKS MERCHANT SPONSORSHIP
| | 1.1. | | ISO desires to deploy and service (or cause to be deployed and serviced), at merchant
locations, terminals (“POS Terminals”) that will be connected to the shared electronic
funds transfer networks set forth on Schedule A to this Exhibit G, as it may be amended
from time to time by FDMS in its sole discretion (the “Debit Networks”), to transmit point
of sale transactions (“POS Transactions”) generated by these POS Terminals through the
Debit Networks’ telecommunications and processing systems which effectuate the switching,
processing and settlement of transactions (“Debit Network Systems”). (The services
described in this paragraph shall be referred to in this Exhibit G as the “POS Services.”). |
| |
| | 1.2. | | ISO may offer qualified merchants the ability to provide, or have Customer provide on
such merchant’s behalf, merchants’ ISOs with the option to pay their bills by initiating
funds transfers through Debit Network Systems without PIN entry or verification, subject to
additional terms and conditions agreed to by the ISO and FDMS (“PIN-less Debit”). (The
services described in this paragraph shall be referred to in this Exhibit G as the
“PIN-less Debit Services.” The POS Services and PIN-less Debit Services, collectively,
will be referred to in this Exhibit G as the “Debit Services”). |
| |
| | 1.3. | | Debit Networks require that in order for ISO to provide the POS Services to merchants,
merchants must be sponsored into the Debit Network by a member of such Debit Network
(“Network Member”). Certain Networks (“Standard Networks”) require that in order for ISO
to provide the PIN-less Debit Services to merchants, merchants must be sponsored into the
Debit Network by a Network Member. |
| 2. | | Duties of FDMS. Subject to the provisions of this Agreement, FDMS agrees to cause
FFB, a Network Member, to: (a) sponsor Merchants into Debit Networks for provision of POS
Services; (b) sponsor Merchants into Standard Networks for provision of PIN-less Debit
Services through Standard Networks, subject to additional terms agreed upon by FDMS and ISO;
provided, that FFB, in its absolute discretion, may refuse to sponsor any Merchant and may
terminate its sponsorship of a Merchant or direct ISO to refuse to provide or terminate its
provision of Debit Services to a Merchant. |
| | 2.1. | | Neither SERVICERS nor FFB will be responsible for the acts or omissions of any Debit
Network or its agents or representatives. |
| 3. | | Conflict with Agreement. In the event of a conflict between this Exhibit G and the
remainder of the Agreement as it relates to the subject matter hereof, the terms of this Exhibit G
shall control. Otherwise, all terms and conditions of the remainder of the Agreement shall
likewise apply to this Exhibit. |
Exhibit G, Page 1
Schedule A
DEBIT NETWORKS
| 1. | | All EDS networks, including; ACCEL, The Exchange, Instant Teller, Mpact, and TX. |
| |
| 2. | | Alaska Option |
| |
| 3. | | All Pulse networks, including; TYME, Money Station, and Gulfnet |
| |
| 4. | | All Star networks, including; MAC, Cash Station, Alert, Avail, Bankmate, Cactus, Explore,
Honor, Lynx, Most, and Relay |
| |
| 5. | | NYCE |
| |
| 6. | | Interlink |
| |
| 7. | | Maestro |
| |
| 8. | | Any other network added by FFB after the Effective Date. |
Schedule A to Exhibit G, Page 1
